S&P Writes Wrong Headline Upgrading Brazil After France Gaffe

Nov. 17 (Bloomberg) -- Standard & Poor’s, a week after
roiling global markets with an erroneous message to subscribers
suggesting it cut France’s credit rating, sent a release today
announcing that it had raised Brazil’s credit ranking to BBB-.
That’s the grade the country already had.

S&P, the world’s largest provider of bond ratings, sent the
release at 2 p.m. with the headline “S&P Ups Brazil Sov Rtg To
‘BBB-’; Strong Amid Global Worsening.” The body of the release
correctly stated that Brazil and its $2.1 trillion economy had
been upgraded to BBB. New York-based S&P sent a corrected
headline 16 minutes later.

The real rose to 1.7794 per dollar at 2 p.m. New York time,
from an intra-day low of 1.7885. It then fell to 1.7818 two
minutes later.

“There is a lot of volatility and confusion,” Mauricio
Junqueira, a money manager who helps oversee $300 million at
Squanto Investimentos in Sao Paulo, said in a telephone
interview. “I have some people calling and asking what’s going
on. Everyone is lost. S&P has to be careful.”

John Piecuch, a spokesman for S&P in New York, said the
firm is looking into the matter.

The mistake comes as regulators in Europe and the U.S.
consider regulations designed to rein in S&P and Moody’s
Investors Service, which together issue 79 percent of credit
ratings, according to a report released in September by the U.S.
Securities and Exchange Commission. European Union Financial
Services Commission Michel Barnier said on Nov. 15 policy makers
were considering plans to ban some sovereign ratings.

‘Stricter Rules’

“Credit-rating agencies should follow stricter rules, be
more transparent about their ratings and be held accountable for
their mistakes,” Barnier said in a statement from the European
Commission in Brussels.

France’s stock market regulator opened an investigation
after S&P sent, and then corrected, an erroneous message to
subscribers suggesting France’s top credit rating had been
downgraded. French 10-year bond yields rose as much as 28 basis
points after the mistaken announcement. S&P said the message was
a “technical error” and that it was cooperating with “all the
relevant authorities.”

The European Union proposed on Nov. 15 new regulations that
would force companies to rotate the credit-rating companies they
hire, as well as restrict when the raters can release their
assessments of governments.